Bankruptcy

Before the introduction of Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs), Bankruptcy was often the only option available to those with serious debt problems.

In Bankruptcy, you will typically be discharged from your unsecured debt (apart from debts owed to the Student Loans Company) in twelve months and can start afresh, although it is possible that you’ll be asked to pay a proportion of your disposable income each month (known as an Income Payments Agreement, when entered into voluntarily, or an Income Payments Order, when obtained from a court by the Official Receiver or Trustee) for a period of up to three years.

Bankruptcy also has a number of serious legal and professional implications, which will need to be considered carefully before any decision is made – for example, you cannot enlist in the armed forces as an undischarged Bankrupt. That's why it's so important that you seek impartial debt advice from a trusted source.

Petitioning for you own Bankruptcy will cost between £450 and £612, depending on your financial circumstances and which court you're presenting your petition to. This includes a court fee, currently set at £150 (you may not be required to pay this if, for example, you are on Income Support), a Bankruptcy deposit of £450 and £12 to swear the Statement of Affairs Affidavit, if you are petitioning in the High Court. If there is any beneficial interest (equity) available in your home then the Official Receiver will look to release it by selling the property. You will also find credit difficult to come by in the future.

In extreme cases, where reckless or dishonest behaviour can be established, a Bankruptcy Restriction order (BRO) can be made which extends the imposition of bankruptcy on individuals for a period of between 2 - 15 years.

You can sometimes be forced into bankruptcy if your debts are over £750 and you have frequently missed payments, or if you have missed IVA payments (if you are in an IVA and can’t make a payment contact your Insolvency Practitioner straight away. Their job is to advise your creditors of any change in your circumstances). Some people choose to declare bankruptcy themselves but you need to explore all other options very carefully first.

If you need advice on Bankruptcy, there's no need to wait or book an appointment, our Advisors are available Monday to Friday 8am to 8pm and Saturday 9am to 5pm on 0800 043 40 50.